Protection and insurance

If you think about your core team, the skills and more importantly knowledge of your business and its inner workings that your key individuals have, what would you do if you unexpectedly lost them to illness or sudden death? Are they replaceable and at what cost to your business?

Your Fairstone adviser can help you to understand the importance of setting up corporate insurance.

Business protection

The death or serious illness of a key director or employee can cause significant consequences for a business including:

  • Loss of profits

  • The recall of loans

  • Reduced capacity

  • Loss of key clients/contacts

  • Reduced practical know-how

You can reduce the risks for yourself and your business with the following protection options:

Shareholder protection

The death of a major shareholder could have a serious impact on your business.

You have two situations to consider:

  1. If the shareholder’s beneficiaries decide to cash in their inherited shares
  2. If the existing shareholders wish to purchase the shares, but lack the adequate funds to do so.

Shareholder protection can help with this by setting out how shares are to be managed if a shareholder passes away. The policy can also include critical illness and is taken out on the lives of each shareholder by either fellow shareholders, or the business. Should a shareholder die or become critically ill, pay-outs can be used to purchase the shares of the holder.

Key person insurance

Key person insurance is a policy that helps to safeguard a business against the financial impact of death, terminal illness or critical illness of a key person during the policy term. It will usually cover you for recruitment and training costs and well as the value of lost business.

The policy is written on the life of the key person but owned and paid for by the business.